Correlation Between ClearBridge Large and VictoryShares Discovery

Can any of the company-specific risk be diversified away by investing in both ClearBridge Large and VictoryShares Discovery at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining ClearBridge Large and VictoryShares Discovery into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ClearBridge Large Cap and VictoryShares Discovery Enhanced, you can compare the effects of market volatilities on ClearBridge Large and VictoryShares Discovery and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in ClearBridge Large with a short position of VictoryShares Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of ClearBridge Large and VictoryShares Discovery.

Diversification Opportunities for ClearBridge Large and VictoryShares Discovery

0.95

Correlation Coefficient

ClearBridge Large  VictoryShares Discovery

Almost no diversification

The 3 months correlation between ClearBridge and VictoryShares is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding ClearBridge Large Cap and VictoryShares Discovery Enhanc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares Discovery and ClearBridge Large is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on ClearBridge Large Cap are associated (or correlated) with VictoryShares Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares Discovery has no effect on the direction of ClearBridge Large i.e., ClearBridge Large and VictoryShares Discovery go up and down completely randomly.

Pair Corralation between ClearBridge Large and VictoryShares Discovery

Given the investment horizon of 90 days ClearBridge Large Cap is expected to under-perform the VictoryShares Discovery. In addition to that, ClearBridge Large is 1.14 times more volatile than VictoryShares Discovery Enhanced. It trades about -0.12 of its total potential returns per unit of risk. VictoryShares Discovery Enhanced is currently generating about -0.11 per unit of volatility. If you would invest  5,543  in VictoryShares Discovery Enhanced on December 24, 2024 and sell it today you would lose (379.00) from holding VictoryShares Discovery Enhanced or give up 6.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

ClearBridge Large Cap  vs.  VictoryShares Discovery Enhanc

ClearBridge Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days ClearBridge Large Cap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Etf's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

VictoryShares Discovery

Risk-Adjusted Performance

Very Weak

Over the last 90 days VictoryShares Discovery Enhanced has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Pair Trading with ClearBridge Large and VictoryShares Discovery

The main advantage of trading using opposite ClearBridge Large and VictoryShares Discovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ClearBridge Large position performs unexpectedly, VictoryShares Discovery can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in VictoryShares Discovery will offset losses from the drop in VictoryShares Discovery's long position.

The idea behind ClearBridge Large Cap and VictoryShares Discovery Enhanced pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.